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Compliance and Fraud Resources

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Defendants Arraigned in Suffolk County Mortgage Fraud

By Jennifer Harmon

Six Suffolk County residents were arrested for creating fake paystubs and federal W-2 forms to fraudulently obtain $5.9 million in fraudulent mortgages from Emigrant Mortgage Co., Wells Fargo Home Mortgage, National City Mortgage and other lenders.

Two of the defendants, Martha Huezo, 38, of Mastic Beach, and Luis Lino, 46, of Hauppauge, a real estate broker for Millennium Homes in Bay Shore and Easy Homes Realty in Brentwood, pleaded not guilty to forgery and other charges at their arraignments in Suffolk County Court.

The district attorney's office handed up an 82-count indictment on Dec. 24 of 2009. The indictment alleges the fraudulent procurement by six defendants of $5.9 million in mortgages for 21 properties in Brentwood, Central Islip, Holbrook, West Babylon, Amityville and Nesconset.

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Two Indicted in Mortgage Fraud Scheme

By Jennifer Harmon

Two Minnesota men have been indicted on claims that they orchestrated a mortgage fraud scheme through which one received more than $5 million from investors who purchased approximately 70 residential properties in Florida and Minnesota between December 2006 and April 2007.

The indictment charges Michael Anthony Prieskorn, 35, of Ellendale, Minn., and Richard Mathew Laho, 54, of Buffalo, Minn., with 23 counts of wire fraud, one count of mail fraud and one count of conspiracy to commit wire fraud. Prieskorn, who was arrested in Florida, also was charged with two counts of engaging in a monetary transaction.

According to the indictment, the defendants conspired to obtain mortgage loan proceeds fraudulently by making false representations and promises and withholding material information about the purchase of residential properties.

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Voice of the Industry

Fighting Fraud Through Technology: Transparency Is the Key

Perspectives by Sanjeev Dahiwadkar

Since the Home Affordable Modification Program was implemented last year, there has been a flurry of activity among consumers, counselors, servicers and other stakeholders in the default management process. One of the ways to completely eliminate any fraud is by using a system that allows complete transparency.

The entire process of modifying a loan is based on communication. And while servicers have made gallant efforts to manage the historical levels of defaults, they need technology that will prevent fraud.

Consider the need for direct communication. Consumers need to communicate with servicers about what information is needed and the information they have. Servicers need to communicate with consumers about the available modification options based on the information received. And information can be shared with counselors and mortgage insurance companies as part of the modification process.

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Legal Corner

By Herman Thordsen

ARIZONA LAW PROFESSOR STATES IT IS NOT IMMORAL TO 'WALK AWAY' FROM A MORTGAGE HOME LOAN

FACTS

Arizona law professor Brent White says the only thing standing between many "underwater" homeowners and a better financial future is a misguided sense that walking away from a loan commitment is morally wrong. White, an associate professor at University of Arizona's James E. Rogers College of Law, has spent the past few months presenting his argument to other lawyers, real-estate professionals and the national media.

White argues that underwater homeowners, those whose unpaid loan balance exceeds the value of their home, are being manipulated into picking up the tab for a real-estate crash that borrowers and lenders created equally. White does argue that banks might be more inclined to lower the principal balance on inflated home loans if more borrowers did just that.

Despite all of the attention strategic default has received, statistics indicate that only a tiny fraction of the country's more than 5 million homeowners whose loans are upside-down have stopped making payments by choice.

White said his primary aim is to give borrowers a rational alternative to the rhetoric of guilt and shame coming from financial leaders and politicians, which labels a practice that is perfectly acceptable in the business world as immoral and irresponsible if tried at home.

His discussion paper, titled "Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis," points out that lenders and other businesses are not saddled with the same moral constraints that would prevent most individuals from defaulting by choice.